Offshoring driven by cost-cutting not quality

The reasons that most organisations (86%) offshore business services have little to do with improving services and everything to do with cutting costs, a survey by the Chartered Institute of Personnel and Development (CIPD) has shown.

Just over a quarter (27%) of the 589 HR practitioners polled in the CIPD survey said the skills shortages in the UK were their primary reason for deciding to offshore certain functions.

Setting up a joint venture with overseas businesses and improving processes were both significant drivers (21%) for organisations as a whole. Co-ordinating business activities and increasing revenue (both 20%) were also considerations, followed closely by wanting to increase the focus on core business (18%).

Improving service levels and product quality was a factor for 15% of the organisations surveyed, followed by boosting customer satisfaction (13%) and moving closer to the new customer base (9%).

Avoiding restrictive regulations in the UK and Europe were only cited as considerations by 6% of organisations, and just 5% cited improved IT systems and infrastructure as a reason for offshoring.

But HR is most likely to stay put…

Manufacturing and production are the activities most likely to be offshored, with a third of the HR practitioners polled by the CIPD doing so or seriously considering it.

Almost a quarter (24%) of respondents said IT support was the function most likely to be sent abroad. IT development and call centres/customer services were also primary targets for more than one in five organisations.

Financial back-office support was cited by 19% of HR practitioners as most likely to be offshored, followed by product development (18%) and accounts (16%).

Secretarial services and back-office support functions were likely to be offshored by 8% of the organisations polled.

HR was one of the business activities least likely to be offshored, with just 7% saying they would consider it.

While home admin grows

Administrative jobs are the most likely to be needed when customer services are offshored, with 22% of respondents reporting that these roles were involved in the outsourcing process, followed by supervisory jobs (16%) and technical roles (13%).

Proportionally, more middle and senior managers are involved when marketing, business development and sales activities are offshored.

IT offshoring also places a priority on technical jobs, with a third (33%) of respondents indicating that these roles are involved, followed by administrative (21%) and supervisory (19%) jobs.

Middle management (18%) and senior management (5%) were also involved in IT offshoring.